money How Realtors Work
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Whether you’re buying or selling a home, you may be wondering what a Realtor® does. In short, a Realtor is a real estate professional who is held to a high standard. Although the terms “Realtor” and “real estate agent” are often used interchangeably, there’s a difference between the two.
This guide will go over the distinction as well as how Realtors work and get paid, so you can make an informed decision about whether to hire one.
Realtors vs. real estate agents
A real estate agent and a Realtor are both agents who are licensed to buy and sell real estate. The key difference is that a Realtor is also a member of the National Association of Realtors®, or NAR, which holds its members to a strict code of ethics.
All agents must work for a licensed broker, regardless of whether they’re a Realtor.
Should you hire a Realtor?
Since a Realtor or real estate agent isn’t required by law, you don’t have to hire one. If you’re a buyer, you may choose to work directly with the listing agent instead of hiring a real estate professional. If you’re considering taking this route when purchasing a home, keep in mind that the listing agent may be looking out for the seller’s interest.
Since real estate transactions can be stressful and complex, hiring a Realtor to represent you is usually a good idea. It doesn’t cost anything to work with a real estate agent or Realtor, and they have valuable knowledge of the real estate market.
As a seller, it can be a huge amount of work to complete the home sale transaction without a Realtor or real estate agent, so this approach isn’t recommended.
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Single vs. dual agency
When buying or selling a home, find out whether the Realtor you’re working with has single or dual agency. If a Realtor has single agency, they only work with you, and not the other party involved in the same real estate transaction.
On the other hand, if the Realtor has dual agency, they work for both the buyer and the seller. In this situation, there could be a conflict of interest.. For example, if you want to negotiate the sales price of a home as a buyer with a Realtor who also represents the seller, it may be hard for the agent to accommodate both of your interests.
So, how do you avoid this scenario when working with a Realtor? If a Realtor is a dual agent, they’re required to disclose this information upfront, and you and any other person involved in the home sales transaction must agree to it, according to NAR’s code of ethics.
Realtors work on commission
Realtors normally work on a commission-only basis, which means they only get paid when the sales transaction of a home is successfully closed. Because of their out-of-pocket expenses, Realtors can actually lose money if they don’t make a sale. Since most of them are independent contractors, they don’t have salaries, bonuses, or employee benefits.
When a home is sold, the seller usually pays the commission, not the buyer. Real estate commissions are a percentage of the sales amount, usually around 6%. The amount of money the Realtor or real estate agent pockets is based on the agreement they have with their brokerage firm.
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What Realtors do for buyers
A Realtor who works with a homebuyer is also known as a buyer’s agent. Here are some of the duties they perform.
Ask for a pre-approval letter. During the pre-approval process, a mortgage lender reviews your credit history, credit score, and finances to see if you can afford a mortgage. If you’re pre-approved, you’ll receive a letter with an estimate of how much you can borrow. A Realtor will likely ask for it before agreeing to work with you, since it shows you’re a serious buyer.
Search the Multiple Listing Service (MLS). Once a Realtor knows what homes are in your price range, they can search the MLS database to help you find one that fits your needs.
Schedule home viewings. If you want to see a particular home in person or remotely, your Realtor can schedule a time for you to view the property.
Negotiate the sales price. The purchase price of your dream home isn’t set in stone; a Realtor can help you negotiate it.
Help with inspection and the final walkthrough. If you need help identifying what repairs need to be made, a Realtor can spot issues that need to be addressed. They’ll also walk with you during the final home inspection before you close on the home to see if it’s ready for you to move in.
What Realtors do for sellers
When a Realtor works with a seller, they’re referred to as a seller’s agent, and they perform different duties.
Evaluate the property. Before you put your home on the market, a Realtor will help you identify potential issues. They’ll also help you determine how much it’s worth based on comparable houses in your neighborhood.
Prepare a listing presentation. Once your house is ready to be put on the market, the Realtor is responsible for taking pictures of the home, making sure it’s listed in the MLS database, and advertising it on their website or social media channels.
Track offers. Whenever you receive offers on your home, a Realtor keeps track of them.
Organize paperwork. Throughout the process, a Realtor will help you gather important documents, such as your tax records, deed, title, and sales contract.
Approve home viewings. If a potential buyer wants to view your home, the Realtor will communicate this with you before scheduling an appointment. Additionally, they may set up an open house to show off your home.
Credible’s free search tool can help you connect with a real estate agent in your area.
Whether you’re buying or selling a home, hiring a Realtor can help ensure your real estate transaction goes as smoothly as possible. If you decide hiring one is right for you, interview multiple Realtors to find one that best fits your needs.
About the author: Jerry Brown is a personal finance writer, owner of the Peerless Money Mentor blog, and a contributor to Credible. He has written for major publications such as Forbes Advisor, Business Insider, and Rocket Mortgage.
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